How does this Bridge make a profit exactly?
How does this Bridge make a profit exactly?
So for the first time I had to use a bridge from ARB to ETH. I waited until the ETH fees were low enough and last weekend we got some 3 Gwei fees and I figured it would be the perfect time to bridge from Arbitrium to Ethereum.
Found a bridge called Synapse. I put in my details about which chain to use and to what destination chain. It was only $2.5 cost. I was like wow, amazing. I assumed it would be $2.5 plus some other gas fees.
So I nervously made the transfer and to my surprise the quotes were correct. Only $2.50 went towards fees, plus a 1 penny transaction gas fee on Arbitrum.
Then out of curosity I checked the ETH transaction and it turns out the Bridge had to pay almost $4 in gas just to make the bridge. So its a loss to them. Why would they do this? I verified the sent token and its not a fake scam token, everything seems legit. So why is the bridge operating at a loss?
Bridging from layer 1 to layer 2 cost can be covered and refunded, saved by some DeFi platforms. I wondered same questions like OP and I did not know real answers but my guess goes on there are things behind the scene, between layer 1 and layer 2 that can bring benefit to those DeFi platforms.
As normal users, we can receive airdrops that are sometimes lucrative so what about these DeFi platforms?
My guess is they can receive grants, airdrops from Layer 1 projects too and they use part of it to cover bridging fee for users. It’s type of mutual benefits for Layer 1, Layer 2, DeFi platforms and users.
I don’t know it is a sustainable model for a long term business operations.
They are making profits on other services they offer, and think not all bridging is the same as yours, there are some times and some chains that you actually pay more than the actual costs of the transfers from the chain.
As I checked, Synapse Protocol has these Swap, Pools, and Stake features where they can make profits there, there will be some fees there that they can use to cover what OP encountered.